The World Bank Group has announced a new extension of its Climate Change Action Plan and retired a big climate finance target that had called for 45% of funding to go towards projects with climate co-benefits. The move signals a change in the institution's climate development agenda in the midst of debates on the institution's priority development areas. The move impacts on World bank climate finance, climate change action plan, sustainable development, global climate funding, climate adaptation finance etc.

The World Bank will continue its climate-related work, but will no longer have a dedicated financing target that was added to boost support for climate-related work. The decision comes as a result of pressure from the U.S. administration, which has said that the goal could detract from the body's core work of eradicating poverty and aiding economic growth.

The Climate Finance Target is now in force since 2020.Climate Finance Target adopted in 2020.

In late 2020, World Bank adopted a climate finance target, dedicating 35% of its five-year financing portfolio to projects that have climate co-benefits. A target was also put in place that half of the climate-related funding would be dedicated to adaptation and resilience.

In 2023 the percentage was raised to 45% for the remainder of the five-year period. The Climate Change Action Plan, which was launched in June 2021, was designed to scale up the World Bank's work of supporting countries to integrate climate considerations into country plans.

The approach was to help countries as they addressed climate risks and sought to grow their economies, make energy transitions, make themselves resilient, and develop sustainable infrastructure.

The number of World Bank funds for climate change finance grew.More World Bank funds for climate change finance.

Over the course of the climate strategy, the World Bank drastically scaled up its funding for climate-related activities. In 2025, climate finance went over $39 billion, up from $17 billion in 2020, the organisation said.

The 2025 funding included $16.6 billion directed towards adaptation measures and $22.6 billion towards mitigation efforts. The institution also surpassed its 45% climate co-benefits goal for the year, with 48% of total financing being for climate-related projects.

The rise was related to the World Bank's wider strategy of making climate a part of development activities such as infrastructure, energy and economic programmes in developing nations.

The U.S. Expresses Concerns about Climate Target.

The World Bank Group's decision to phase out the climate finance goal comes in response to criticism coming from the U.S. government, the largest shareholder in the World Bank Group. The Trump administration has said that provisions around climate should not be a hindrance to the organization's efforts on poverty alleviation and economic growth.

In April 2026, U.S. Treasury Secretary Scott Bessent declared that the World Bank should drop the 45% climate finance goal because it caused inefficiencies and engaged in economic decision-making “away from the core business of the World Bank.”

The administration has also implemented a number of measures to limit climate action policies in President Donald Trump's second term, most notably by resuming its efforts to pull the U.S. away from the Paris Agreement.

World Bank remains committed to climate change.

Although the World Bank removed the specific financing goal, he said the World Bank will continue to work on climate action. The organisation said it will continue to do its work on climate-related matters based on the needs and priorities of client countries.

The bank will continue to assist countries in fulfilling their climate pledges, such as those in their national plans and Nationally Determined Contributions (NDCs) under the global climate pact, it added.

The institution's new approach suggests a shift to a system of flexible financing of the climate where support depends on the priorities of each country and not on a global share.

Sustainable Development in the Future Direction of World Bank Climate Strategy

The shift comes as international financial institutions are becoming more subject of debate regarding the trade-off between climate action and economic development. Some people have been calling for more action on the development front, while others have been pushing for resiliency and emissions reduction investments for long-term growth.But supporters of climate finance have been advocating for investment in both resiliency and emissions reduction for long-term growth, while critics have argued for a focus on immediate development challenges.

The new World Bank model and design will continue to influence debates on the responsibilities of global financial institutions in the years to come related to climate change, poverty alleviation and economic development.